NHG - National Mortgage Guarantee
What is NHG? NHG stands for National Mortgage Guarantee. The National Mortgage Guarantee is a guarantee that is provided by the Stichting Waarborgfonds Eigen Woningen within certain conditions. By means of this mortgage guarantee, the Guarantee Fund guarantees the repayment of the mortgage costs to the lender, should the mortgagee no longer (be able to) pay his expenses. As a result, the lender runs virtually no risk and therefore often offers a substantial discount on the mortgage interest rates . As soon as you meet the requirements of the NHG (see below), it is in most cases very attractive to take out a mortgage with NHG.
Purpose of NHG The purpose of the NHG is to promote home ownership and to improve its quality. NHG was originally mainly aimed at people with a low income. However, given the fact that NHG can be obtained in 2021 for mortgages up to $ 325,000 (in 2020 the limit was $ 310,000 / 2019: $ 290,000), nowadays you have to earn a considerable income in order to to be eligible.
Advantages of NHG With a loan with NHG, the Home Ownership Guarantee Fund guarantees the amount borrowed by you. As a result, the lender charges a lower interest rate. This discount that you receive on the interest if the NHG is awarded can even amount to more than 1 percent! You will continue to benefit from this benefit every year.
There is another advantage, namely the housing costs facility. The housing costs facility is intended for people with an NHG mortgage who are temporarily unable to pay their housing costs due to unemployment, disability, divorce or the death of their partner. At that time, it is checked which part of the mortgage is still payable. These charges must simply be paid. The part of the housing costs that can no longer be paid is added to the mortgage. This amount must of course be repaid in the future: it gives people who have temporarily run into difficulties the opportunity to bridge a difficult period without having to sell their home.
Cost of NHG For the NHG you have to pay a one-off premium: the NHG deposit. This NHG deposit has been set for 2021 - just like in 2020 - at 0.7 percent of the mortgage amount (in 2019 this was 0.9 percent of the mortgage amount). These costs are deductible once.
Conditions of NHG Not everyone is eligible for NHG. We have listed the most important conditions for qualifying for an NHG mortgage in 2021 below:
Mortgage amount maximum $ 325,000 (in 2020 this was still $ 310,000) In 2021, you have the option of taking out a mortgage with NHG if the mortgage amount is less than or equal to $ 325,000. That maximum amount - also called the cost limit - includes all additional costs. For homes with energy-saving facilities, the cost limit is 6 percent higher, namely $ 344,500 (2020: $ 328,600).
Meeting the housing ratio If you meet the above requirement, the NHG will assess your financial situation to determine whether you can borrow the desired amount. Your maximum loan amount is determined on the basis of the so-called housing ratio. This is the ratio between the future housing costs and your income. Not every form of income is included in the same way by the NHG. When the income is uncertain or unstable, it may be that this income is only partially or even not included in the calculations. In addition, it is examined whether there are special monthly charges in the form of (personal) loans or alimony. These monthly charges can considerably limit the possibilities.
- temporary employment
In connection with income from temporary employment, the NHG assumes that a letter of intent is available from the employer. This means that the employer indicates that there is an intention to continue the temporary employment. If no letter of intent is available, this income will not be included according to NHG standards.
- Social benefit
In connection with income from social security benefits, the NHG assumes that this is permanent. If this is not the case, this income will not be included according to NHG standards.
In connection with income from an independent profession or business, the NHG has the rule that you must submit an Entrepreneur Income Statement. This is a statement drawn up by experts who determine which income can be calculated.
Your financial data will also be checked at the Credit Registration Office. If you have debts, this has a negative effect on the maximum loan that can be obtained. If you have a code at the CRO in connection with payment problems with loans in the past, it is often very difficult to obtain NHG.
If you pay alimony to your ex-partner, the amount that you pay in alimony per year will be deducted from your income. Alimony paid for children is not taken into account.
Refinancing an existing mortgage You can also apply for NHG when transferring your current mortgage. From 2021, stricter rules will apply to switching to NHG: an interest rate benefit alone is no longer sufficient. NHG gives various reasons for making a refinancing with NHG. Think of an increase for quality improvement (and / or energy-saving facilities) and the conversion of an interest-only loan to an annuity or linear mortgage.
A maximum mortgage amount of $ 325,000 also applies when transferring a mortgage. Since 2020, the condition has been that you can only transfer to NHG if the value of the home does not exceed the cost limit.
The above is a brief summary of the most important points of the NHG. For more information, visit www.nhg.nl.